One of the most crucial jobs in shaping the future of British banking is to be handed to the wealthy investment banker Robin Budenberg.

An important adviser to the government in last year's bank bailout, Budenberg's appointment as chief executive of UK Financial Investments, the body that looks after taxpayers' stakes in Lloyds Banking Group, Royal Bank of Scotland, Bradford & Bingley and Northern Rock, has still to be cleared by Alistair Darling, the chancellor, who is concerned about the political fallout from appointing a City figure to the role.

Budenberg, a senior banker at UBS, is regarded as the frontrunner to replace John Kingman, the civil servant thought to be on the brink of joining investment bank Rothschild.

His appointment could be confirmed within days. John Crompton, the former Merrill Lynch banker who has joined UKFI in a senior role, is also thought to have been considered for the top job at UKFI, which recently recruited Sir David Cooksey as chairman.

Budenberg is poised to join UKFI at a crucial point. While Northern Rock is expected to be split in two following an announcementtomorrow by the European Union, Lloyds Banking Group is trying to embark on a £25bn fundraising exercise to extricate itself from the government's asset protection scheme.

Fees charged by investment banks for underwriting a proposed multibillion pound cash call by Lloyds have been reduced by £100m after lobbying by the Treasury. Six investment banks lined up to help Lloyds stood to share some £300m fees for supporting the fundraising.

But Lord Myners, the City minister, has put pressure on the big banks to reduce their fees.

He told the Guardian this week that institutional investors and company directors were no longer prepared to pay high underwriting fees.

As owner of 43% of Lloyds, the Treasury would have been determined to secure the best possible terms from the investment banks being lined up by the bank, which was itself trying to cut its advisers' fees.

The City expects Lloyds to embark on an £11bn rights issue – some £5bn of which will be bought by the taxpayer, which holds shares through UKFI.

. This means investment banks would underwrite the £6bn of Lloyds shares not being bought by the taxpayer.

Lloyds is hoping to secure a final agreement from the chancellor for taxpayer support for the rights issue, which would also be accompanied by sales of certain assets in an effort to raise £25bn.

This is thought to be a large enough sum to convince the Financial Services Authority that Lloyds would have enough capital to survive the recession without the asset protection scheme.

The bank is also awaiting approval from the EU for the state aid that has been poured into the bank.

While it is expected that Lloyds will need to sell off hundreds of branches, a formal decision from the EU is still some weeks off.

UKFI was created in November 2008 by Darling to manage, according to its website, "the government's investments in financial institutions at arm's length and on a commercial basis".